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Understanding the financing of intergovernmental organisations: A snapshot of the budgets of the UN, NATO and WTO

23-09-2020

Access to stable and adequate financial resources is a crucial condition for the realisation of the global goals of intergovernmental organisations (IGOs). In recent decades, alongside global political changes and the evolution in the role of multilateral cooperation, the resourcing and budgetary management of IGOs have also changed. Moreover, funding available to IGOs has become ever more diversified and complex both in terms of its origin and type. This briefing presents selected aspects of the ...

Access to stable and adequate financial resources is a crucial condition for the realisation of the global goals of intergovernmental organisations (IGOs). In recent decades, alongside global political changes and the evolution in the role of multilateral cooperation, the resourcing and budgetary management of IGOs have also changed. Moreover, funding available to IGOs has become ever more diversified and complex both in terms of its origin and type. This briefing presents selected aspects of the financing of three of the world's largest IGOs: the United Nations (UN), the World Trade Organization (WTO) and the North Atlantic Treaty Organization (NATO). It presents the size and evolution of their budgets as well as the main contributing countries to these budgets, with a particular focus on the EU Member States. The analysis is based mainly on budgetary data for the financial year 2018.

How flexible is the EU budget? Flexibility instruments and mechanisms in the multiannual financial framework (MFF)

23-01-2020

The 1988 introduction of multiannual financial frameworks (MFF) in the European Union (EU) budgetary system has improved financial predictability and facilitated the development of multiannual spending programmes, but has had to be balanced by measures that provided some flexibility and ability to react to unexpected situations. Over the years, these flexibility instruments and mechanisms have developed and proved to be useful. Occasions to use them were frequent, as the crises and challenges faced ...

The 1988 introduction of multiannual financial frameworks (MFF) in the European Union (EU) budgetary system has improved financial predictability and facilitated the development of multiannual spending programmes, but has had to be balanced by measures that provided some flexibility and ability to react to unexpected situations. Over the years, these flexibility instruments and mechanisms have developed and proved to be useful. Occasions to use them were frequent, as the crises and challenges faced by the EU required actions that could not be financed under the tight expenditure ceilings of the agreed MFFs. Experience of implementation of the 2014-2020 MFF demonstrated that, with neither relevant flexibility mechanisms nor the possibility to revise the MFF in the mid-term, achieving policy goals and reacting adequately to unexpected events and crises, especially in the area of migration and security, would be impossible. The flexibility of the EU budgets has already featured as an important issue in the negotiations of the 2021 2027 MFF. The views of the main actors – the European Commission, the Parliament and the Council – on enhancing and designing such flexibility instruments diverge. It has yet to be seen if the issue, following the pattern of the 2014-2020 MFF negotiations, will play a key role in reaching an agreement.

Amended proposal for the 2021-2027 MFF and 2021-2024 recovery instrument 'Next Generation EU' in figures

07-07-2020

This briefing provides a graphic presentation of the next long-term budget and recovery instrument (Next Generation EU) proposed by the European Commission on 27 May 2020 (COM 2020). By comparing it with the Commission's initial proposal of May 2018 (COM 2018) and the European Parliament's negotiating position, we highlight the changes for the future financing of EU priorities. The preparation of the EU's next Multiannual Financial Framework (MFF) started formally in May 2018 with the proposal from ...

This briefing provides a graphic presentation of the next long-term budget and recovery instrument (Next Generation EU) proposed by the European Commission on 27 May 2020 (COM 2020). By comparing it with the Commission's initial proposal of May 2018 (COM 2018) and the European Parliament's negotiating position, we highlight the changes for the future financing of EU priorities. The preparation of the EU's next Multiannual Financial Framework (MFF) started formally in May 2018 with the proposal from the European Commission, more than two years ago. The European Parliament adopted its detailed negotiating position on 14 November 2018. The European Council, however, held its first substantial debate on the proposals only on 20 February 2020, failing to find agreement. The coronavirus pandemic has complicated the situation further. Given the new circumstances, on 27 May 2020 the Commission put forward an amended proposal for the 2021-2027 MFF and, linked to it, a recovery instrument, entitled Next Generation EU (NGEU) for the years 2021-2024.

Economic and Budgetary Outlook for the European Union 2020

31-01-2020

This study, the fourth in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the EU and euro area and their two-year trends. It explains the annual EU budget, provides an overview of its headings for 2020, and sets out the wider budgetary framework – the multiannual financial framework (MFF) – and its possible evolution in the new decade. A special 'economic focus' puts the spotlight on the international ...

This study, the fourth in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the EU and euro area and their two-year trends. It explains the annual EU budget, provides an overview of its headings for 2020, and sets out the wider budgetary framework – the multiannual financial framework (MFF) – and its possible evolution in the new decade. A special 'economic focus' puts the spotlight on the international role of the euro, and on various recent EU-level initiatives in this field.

Establishing an MFF contingency plan

11-05-2020

The EU’s next Multiannual Financial Framework (MFF) should start on 1 January 2021, but the negotiations have encountered delays in the European Council and Council. During the May plenary part-session, the European Parliament is expected to vote a report by its Committee on Budgets, asking the Commission to prepare urgently a legislative proposal for a contingency plan should the post-2020 MFF not be agreed on time. The objective would be to provide a safety net to protect beneficiaries of EU funds ...

The EU’s next Multiannual Financial Framework (MFF) should start on 1 January 2021, but the negotiations have encountered delays in the European Council and Council. During the May plenary part-session, the European Parliament is expected to vote a report by its Committee on Budgets, asking the Commission to prepare urgently a legislative proposal for a contingency plan should the post-2020 MFF not be agreed on time. The objective would be to provide a safety net to protect beneficiaries of EU funds, while ensuring that the EU budget can keep contributing to the fight against the coronavirus pandemic and its socio-economic consequences.

Negotiations on the next MFF and the EU recovery instrument: Key issues ahead of the July European Council

15-07-2020

The current multiannual financial framework (MFF), also known as the EU's long-term budget, comes to an end this year. While the European Commission put forward a proposal for the next MFF and its financing in May 2018, agreement has so far proved elusive under legislative procedures that give a veto power to each Member State. In recent months, the unfinished negotiations have become intertwined with the debate on the creation of a common EU tool to counter the severe socio-economic consequences ...

The current multiannual financial framework (MFF), also known as the EU's long-term budget, comes to an end this year. While the European Commission put forward a proposal for the next MFF and its financing in May 2018, agreement has so far proved elusive under legislative procedures that give a veto power to each Member State. In recent months, the unfinished negotiations have become intertwined with the debate on the creation of a common EU tool to counter the severe socio-economic consequences of the coronavirus pandemic. In May 2020, the Commission tabled revised proposals for a 2021-2027 MFF worth €1 100 billion and the EU own resources system, together with a proposal for a €750 billion recovery instrument, Next Generation EU (NGEU). The latter would be financed with funds borrowed on the capital markets to reinforce EU budgetary instruments in the 2021-2024 period. In addition, an amendment to the current MFF would provide a bridging solution to fund some recovery objectives this year already. The complex negotiations, which involve many different legislative procedures, are now entering a key phase. Issues expected to be under the spotlight include: the size of the MFF and of the NGEU and their interaction; reform of the financing system with the possible creation of new EU own resources; the breakdown of allocations (between policies and Member States); the contribution to the green transition; conditionalities (such as rules linking EU spending to the rule of law or to challenges identified in the European Semester); flexibility provisions to react to unforeseen events; the mix of grants and loans in the recovery instrument; and the repayment of funds borrowed under NGEU. European Council President Charles Michel has prepared a compromise package ahead of the July European Council meeting. If the Heads of State or Government find a political agreement, the next step will involve negotiations between Parliament and Council, since the former's consent is required in order for the MFF Regulation to be adopted. Parliament, which has been ready to negotiate on the basis of a detailed position since November 2018, is a strong advocate of a robust MFF and an ambitious recovery plan. It has stressed that it will not give its consent if the package does not include reform of the EU financing system, introducing new EU own resources.

The 2021-2027 Multiannual Financial Framework in figures

24-01-2020

The Multiannual Financial Framework (MFF) sets the maximum level of resources (‘ceiling’) for each major category (‘heading’) of EU spending for a period of seven years. In addition to a financial plan, it sets the EU’s long-term priorities. With the 2014-2020 MFF nearing its end, the EU is now in negotiations on the next long-term budget. In May 2018, the European Commission presented a package of legislative proposals for the 2021-2027 MFF. Equivalent to 1.11 % of EU-27 gross national income (GNI ...

The Multiannual Financial Framework (MFF) sets the maximum level of resources (‘ceiling’) for each major category (‘heading’) of EU spending for a period of seven years. In addition to a financial plan, it sets the EU’s long-term priorities. With the 2014-2020 MFF nearing its end, the EU is now in negotiations on the next long-term budget. In May 2018, the European Commission presented a package of legislative proposals for the 2021-2027 MFF. Equivalent to 1.11 % of EU-27 gross national income (GNI), it takes into account the initiatives to which the Member States committed in the Bratislava and Rome declarations, as well as the loss of a major contributor due to the United Kingdom’s withdrawal from the EU. The European Parliament considers the proposal insufficient, given all commitments and priorities, and estimates that the MFF ceiling should amount to 1.3 % of EU-27 GNI. The Member States’ views on both the size and other aspects of the future MFF diverge, and the Council has not yet agreed its position. EU leaders are expected to take the next important decisions on the matter during the first half of 2020. The resources proposed for the 2021-2027 MFF are distributed across seven headings, representing the EU’s long-term priorities. They include spending programmes and funds that are the basis for the implementation of the EU budget. Our infographic provides a breakdown of the proposals for each of the seven headings, as well as an indication of the changes from the current MFF (2014-2027) represented by both the Commission's proposal and Parliament's position on that proposal.

Cohesion funds, values and economic and monetary union in the 2021-2027 MFF: European Parliament position on Heading 2 – Cohesion and values

21-01-2019

Heading 2 – Cohesion and values – is the biggest in terms of budget in the multiannual financial framework (MFF) proposed by the European Commission for the 2021 to 2027 period. It is also the most diversified heading in terms of the types of programme and fund included. It encompasses expenditure on cohesion, one of the EU's long-standing policies, on an entirely new budgetary instrument supporting economic and monetary union, and on other increasingly important goals, including youth employment ...

Heading 2 – Cohesion and values – is the biggest in terms of budget in the multiannual financial framework (MFF) proposed by the European Commission for the 2021 to 2027 period. It is also the most diversified heading in terms of the types of programme and fund included. It encompasses expenditure on cohesion, one of the EU's long-standing policies, on an entirely new budgetary instrument supporting economic and monetary union, and on other increasingly important goals, including youth employment, the creative sector, values, equality and the rule of law. Under this heading the Commission is proposing to almost halve the Cohesion Fund and double the Erasmus+ programme. Moreover, some of the programmes included fall under shared management between the Commission and EU Member States, while some are managed directly by the Commission. This briefing presents Heading 2 in detail, on the basis of previous EPRS publications on the 2021-2027 MFF proposal. It aims to provide some clarity on its structure and allocation in comparison with the current MFF, based on the Commission's proposal for the 2021-2027 MFF and the European Parliament's negotiating position adopted on 14 November 2018. The analysis is structured around three issues: the introduction to the EU budget of a new budgetary instrument for economic and monetary union, a change in the allocation for cohesion policy, and the merging of programmes supporting people, social cohesion and values.

Performance budgeting: A means to improve EU spending

16-03-2018

In 2015, the European Commission launched an initiative entitled 'The EU budget focused on results'. It is aimed at changing spending culture and making results a horizontal priority for the EU budget. The initiative is based on a popular contemporary budgeting method known as 'performance budgeting'. This paper presents the method and its application to the EU budget. It explains why, although not easy to implement, performance budgeting is seen as an attractive way to increase value for money and ...

In 2015, the European Commission launched an initiative entitled 'The EU budget focused on results'. It is aimed at changing spending culture and making results a horizontal priority for the EU budget. The initiative is based on a popular contemporary budgeting method known as 'performance budgeting'. This paper presents the method and its application to the EU budget. It explains why, although not easy to implement, performance budgeting is seen as an attractive way to increase value for money and enhance the transparency and democratic accountability of public finances. The paper also analyses how the performance budgeting approach has evolved within the EU budgetary system and what challenges and obstacles to its implementation remain. The commitment of the European Commission to the principles of performance budgeting, as well as the broad support for the idea expressed by the European Parliament and the Council, give grounds to believe that these efforts will continue in the post-2020 Multiannual Financial Framework.

Economic and Budgetary Outlook for the European Union 2019

30-01-2019

This EPRS study, the third in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the Union and euro area, and their two-year trends. The figures show that growth was moderate in 2018, at 2.1 %, although this is expected to deteriorate slightly in the coming months, given the poorer global outlook than a year ago. That said, unemployment is at a post-crisis low, and is expected to improve further, given ...

This EPRS study, the third in an annual series, provides an overview of the economic and budgetary situation in the EU and beyond. It summarises the main economic indicators in the Union and euro area, and their two-year trends. The figures show that growth was moderate in 2018, at 2.1 %, although this is expected to deteriorate slightly in the coming months, given the poorer global outlook than a year ago. That said, unemployment is at a post-crisis low, and is expected to improve further, given positive labour market conditions. The study explains the annual EU budget, providing an overview of its headings for 2019, with the total amounting to €165.8 billion (or around 1 % of EU gross national income). The budget focuses on priorities that include stimulating investment, growth and research, the creation of new jobs – especially for young people – and addressing migration and security challenges. The wider budgetary framework – the multiannual financial framework (MFF) – is also analysed in the study, with key decisions on spending for the 2021-2027 period due to be taken during 2019. In this year's edition, the special 'economic focus' offers a bird's eye view of SMEs and SME policy in Europe, and of various recent EU-level initiatives in this field. The EU budget devotes particular attention to SMEs, given their central role in the European economy and in job creation. The EU needs to continue devoting efforts to improving European SMEs' access to finance, since despite recent improvements, they are still too heavily reliant on debt financing which puts them at risk in a downturn.

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